Web3 Adoption in Healthcare
June 23rd, 2022

Wayne Boulais, Tensility Venture Partners

Armando Pauker, Tensility Venture Partners

Nicholas Shapiro, UPMC Enterprises

Vicky Wang, Kellogg School of Management, Northwestern University

There are categories of healthcare problems that are well-suited for Web3 infrastructure solutions. Existing healthcare institutions are limited by practices and regulations that do not incentivize data sharing across participants. Key issues in healthcare data today include the lack of a full longitudinal data set for a given patient and the struggle by patients to control their own data. With Web3, we can rethink how the participants in the ecosystem can be incentivized and energized to find new ways to share data to improve the healthcare system. Web3 concepts suggest new approaches to addressing the issues of trust, alignment, and transparency. 

The Decentralized Autonomous Organization (DAO) is a flexible organizational structure that could be the first way that Web3 ideas begin to impact healthcare. The Web3 smart contract and the blockchain provide the means for incentivizing data sharing in many forms across the healthcare landscape, which consists of patients, physicians, healthcare providers, payers, pharmaceutical companies, and medical research institutions.

The graphic below is a general model of a healthcare DAO. At the highest layer, the founding team determines their mission and strategy. The founding team, in discussion with other participants, determines how data is going to be shared (with some defined opt-in procedure to meet privacy regulations), the incentives for sharing the data, the group governance structure, and how the treasury will be managed. The last layer encompasses  the potential constituents of the DAO. Every DAO will have a different set of constituents based on the mission. 

Examples of existing and potential healthcare DAOs include:

  • Physician-led credentialing. Credentialing today is an expensive, labor-intensive process driven by payer and provider organizations. The mission of this DAO is for doctors to share and own their credentials in order to provide the best care for patients. The doctors benefit by owning and managing their own data without having to deal with multiple third parties. If enough physicians band together in a DAO, then the DAO could sell access to the body of credentials to third parties. Profits from the sale would flow back to the doctors composing the DAO. Leah Houston, MD, has founded HPEC, also called the DoctorsDAO, to bring practicing physicians together in a community to contribute their credentials with the mission “to provide the best care to patients - free from third party interference.” 
  • Clinical trial patient communities. Pharmaceutical companies spend sizable amounts of time, money, and effort to find and recruit patients for clinical trials of new drugs. Patients are normally considered “production inputs” to the clinical trial process. Now the patients can come together across the globe to contribute their personal medical history around an ailment. This DAO’s mission would be to aggregate people with a certain disease and function like a marketplace for drug companies to match with individuals. The DAO incentive structure would reward its members for sharing their data and potentially participating in trials.
  • Patient communities centered on specific diseases. The DAO’s mission would be to facilitate patient communities coming together with a common goal of reducing the negative effects of the disease. A community could come together around a very specific condition that affects a small population, such as “Lean Mass Hyper-Responder” phenotypes that undertake a carbohydrate restricted diet. The members could come together, fund a treasury that could be a non-profit or for-profit, share their data, and collectively vote on funding research or other initiatives pertaining to increasing awareness and protocols for the condition. 
  • Medical research communities. A tremendous amount of valuable research is done at universities and research hospitals. However, there is limited incentive to share that research data after the research papers are published. A DAO’s mission in this space would be to bring together researchers (and their data sets) and funding sources and incentivize them toward solving a healthcare problem by accelerating research through a community effort. A good example here is VitaDAO that has a goal of advancing longevity research. Members today can join VitaDAO by purchasing VITA tokens or earning them through contributions of work or intellectual property. The DAO accepts applications from researchers for projects, members vote on vetted proposals, and the accepted projects get funding from the DAO treasury. 
  • Novel health insurance models. The concept of how a health insurance DAO would work is discussed in detail in a post by KdT Ventures. The mission of such a DAO would be to both improve  healthcare outcomes and lower costs for its members. This is achieved through getting “all patient data onto a blockchain to ensure privacy, censorship-resistance, transparency, and embedded incentives … (Then) a health insurance DAO can be created to front the healthcare bills, but demand the health data that necessitated the reimbursement in return, in the form of doctor’s notes, medication administrations, diagnostics results, lab results, etc.” All the shared data would be used to measure outcomes and then make better health recommendations. 

Of course, there will be distributed healthcare communities that do not use the DAO structure. For example, Hashed Health has started a company, ProCredEx, that “allows members to sell or share verifications they’ve created and purchase verifications they need. ProCredEx’s validation engine and distributed ledger technology securely presents immutable credentials data.” The benefits to the health system are participating in a federated sharing of credentials across all its employees - not just the physicians - to lower the cost for all providers.

Importantly, not all healthcare problems are best addressed by Web3 infrastructure.  Careful consideration must be given to matching the appropriate enabling technology with the proposed solution.  Deploying Web3 infrastructure for the sake of describing a company as forward-looking will simply add cost and friction to stakeholder adoption.  Several examples listed above demonstrate areas where the information sharing that does take place is controlled by centralized clearing houses with significant market capture. Web3 infrastructure, when directed effectively, can erode the control of middlemen that extract meaningful value from stakeholders while providing limited improvement - which leads to a lack of trust and limited sharing.  Healthcare innovation using Web3 infrastructure will ultimately succeed in use cases where data creators and owners are empowered and the whole is materially more valuable than the sum of the parts.  

*UPMC Enterprises, a division of health system UPMC, owns a financial stake in Hashed Health. 

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